You have been named the Chief Financial Officer (CFO) of a twoyear old company,...

70.2K

Verified Solution

Question

Accounting

You have been named the Chief Financial Officer (CFO) of a twoyear old company, ABC Analytics. Financials havebeen prepared by a bookkeeper. As CFO, you responsible for thepreparation of accurate financials, analysis and review of thefinancials before they are released and communication of theresults of your company to banks, investors, creditors and thegovernment, as necessary. One of the members of the board has askedyou to prepare a memorandum which addresses the following points.Each point should be answered in a separate paragraph and bewritten to be as clear and concise as possible (2 points each).

a. What are the four major financial statements and discuss theirpurpose?
b. What is the purpose of a budget and what are thecomponents?
c. Why is it important for the CFO and his/her staff to analyzevariances of budget to actual or forecasted to actual amounts, andinvestigate reasons for significant variances on a timelybasis?
d. If you are an investor in ABC Analytics,what are the pitfalls in reviewing earnings per share withoutaccompanying pertinent information, i.e. what are the things thatcan distort earnings per share from year to year? Why do you careabout diluted earnings per share?
e. Why is management’s discussion and analysis included in theannual report?
In order to obtain maximum credit, the Individual Paper should
• Demonstrate a comprehensive understanding of accounting andbusiness concepts, analysis, and unique insights. Properly citingFASBs or other authoritative literature helps demonstrate thisability.
• Be clear and concise, directly addressing issues with theproper use of English grammar and spelling, free of errors.
• Make well developed business analyses with strong supportingarguments.

Answer & Explanation Solved by verified expert

4.4 Ratings (655 Votes)

A The four major purpose of financial statements are Income statement Represents the revenues expenses and profitslosses generated of a reporting period This is considered as the most important financial statements since it presents the operating results of an entity Balance sheet Represents the assets liabilities and equity of the entity as of the reporting date Thus the information is as of a specific time The report format is structured so that the total of all assets equals the total of all liabilities and equity known as See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingYou have been named the Chief Financial Officer (CFO) of a twoyear old company, ABC...You have been named the Chief Financial Officer (CFO) of a twoyear old company, ABC Analytics. Financials havebeen prepared by a bookkeeper. As CFO, you responsible for thepreparation of accurate financials, analysis and review of thefinancials before they are released and communication of theresults of your company to banks, investors, creditors and thegovernment, as necessary. One of the members of the board has askedyou to prepare a memorandum which addresses the following points.Each point should be answered in a separate paragraph and bewritten to be as clear and concise as possible (2 points each).a. What are the four major financial statements and discuss theirpurpose?b. What is the purpose of a budget and what are thecomponents?c. Why is it important for the CFO and his/her staff to analyzevariances of budget to actual or forecasted to actual amounts, andinvestigate reasons for significant variances on a timelybasis?d. If you are an investor in ABC Analytics,what are the pitfalls in reviewing earnings per share withoutaccompanying pertinent information, i.e. what are the things thatcan distort earnings per share from year to year? Why do you careabout diluted earnings per share?e. Why is management’s discussion and analysis included in theannual report?In order to obtain maximum credit, the Individual Paper should• Demonstrate a comprehensive understanding of accounting andbusiness concepts, analysis, and unique insights. Properly citingFASBs or other authoritative literature helps demonstrate thisability.• Be clear and concise, directly addressing issues with theproper use of English grammar and spelling, free of errors.• Make well developed business analyses with strong supportingarguments.